“Legal Files” gets interesting letters from all sorts of sources. Here’s one from none other than Publisher Martin:

If Bring a Trailer is the Tiffany of online sales, then Facebook Marketplace is the armpit. No vetting, no uniform description, no trolls.

I don’t know how these deals find me, but on a Friday night, a listing for a 1967 Alfa Duetto popped onto my screen. With the VIN 665932, engine number AR00536.18920. The ad claimed the car had been stored for many years, had last been registered in 1980, had only 70,000 or so miles with just two owners and included all the documentation since 1968. Asking price was $30,000.

I texted then called the seller. He seemed reasonable enough. On the phone he said the car was not rusty, was not hit and was completely intact.

I had just seen a rusty Duetto sell on BaT for nearly $50,000. I thought if I could get this Facebook car running, then flip it as a real barn find, I was sure to make a few bucks. My long-dormant instincts from my buy-sell days had kicked in.

In those days, when you found a car you wanted, rule number one was to secure it with some kind of deposit. In the pre-PayPal days, that meant getting cash to the seller, often in person. You inspected the car. If it checked out, you brought collected funds and a tow truck. You exchanged the cash for the title, loaded up the car, and were on your way.

The seller of the Duetto said he would take a PayPal deposit, but insisted I make a ‘friends and family’ payment. He also gave me a different name than his to send the money to. I originally was going to send $1,000 but thought better of it and just sent $500. I included that I would buy the car if it was as represented and not rusty. He agreed and texted that he would hold the car for me.

The next morning, SCM Executive Editor Jeff Sabatini joined me to look at the car. (It was only a few blocks from his house, and he couldn’t resist.)

The Duetto was a disappointment. It had very rusty floors, the nose had been punched, and the hard top was aftermarket fiberglass. The whole car had been badly resprayed white over the original cream. On the positive side, the spare-tire well was rust- free, the dash top was not cracked and the seats were decent. I checked and the serial number and engine number were correct for the car.

However, my fantasies about pulling it out of the garage, turning over the engine, and putting it on BaT as a barn find had vaporized. It needed everything. Jeff agreed: ‘There will be no good surprises here.’

To make this a decent car would take $20,000, and to properly restore it would be $50,000. The seller revealed he had bought the car two days earlier for $15,000 and was looking for a quick flip. I don’t begrudge anyone making a profit, but the only profit here would be to him, with nothing leftover.

I told him the car was not for me, and he agreed to return my deposit. The story could have ended here with no harm, no foul, but it didn’t. The seller called me later to say he was keeping my $500 deposit because of his ‘time I had taken up.’

I checked with PayPal. I was told because I had used ‘friends and family’ (at the seller’s insistence, recall) PayPal could not intervene, as this was not considered a business transaction.

I began to think this was not the seller’s first rodeo.

The Duetto ad showed up again on some Alfa forums, where I commented, ‘Please contact me about this car before sending any money.’

That caused another string of angry communications from the now-irate seller. When I asked again about my deposit, he became increasingly agitated and insulting. During the next couple of weeks, other Facebook users pointed out to me that this seller had multiple Facebook accounts with cars for sale.

I accept the $500 is lost. Better to be out $500 rather than $1,000, and even better that this Titanic of a Duetto is not sinking to the bottom of the ocean and taking me with it.

My question is what I might have done differently? Did I have any other choice but to take the chance and send the money?

“Legal Files” responds:

Sure, you had a choice. You could have looked at the car before placing a deposit, but that would have risked another buyer beating you out. Plus the loss of a night’s sleep from the red-mist nightmares.

Seriously, this is one of those times that you did all you could and protecting yourself was impossible. You had a good contract, but the seller breached it. Be glad you didn’t buy the car and then see it, like quite a few internet buyers have experienced.

There was a clue

The clue here was the insistence on using “friends and family” and the different account name. It’s easy to say that your fraud antenna should have gone up, but none of us were on the phone with you to gauge the entire conversation. This may just be hindsight being 20/20.

We all make decisions about whether to trust people based upon a number of factors — what they say, how they say it, their expressions when they say it, and what they don’t say. A phone conversation makes that harder because you lose the nonverbal communications. Communicating electronically makes this enormously worse.

Most con artists are engaging and present themselves as honest and forthright. If they couldn’t do that, they wouldn’t be successful. That observation makes it critical that we look closely at the littlest things, being careful not to ignore or dismiss them by giving the guy the benefit of the doubt. This becomes particularly important when you are not dealing with someone in person.

What is a deposit?

Looking at the legal perspective, exactly what does giving a deposit to a seller accomplish?

Deposits can be either refundable or nonrefundable. If the deal doesn’t get made, do you get your money back? Generally, deposits are refundable unless the parties agree that a deposit is nonrefundable. Here, with so little known about what deal might eventually have been worked out — if any — it seems pretty clear that the deposit was refundable if the deal failed for any reason whatsoever.

A second issue is what the deposit actually means from a contractual standpoint. It seems that the answer is that we have a contract where the seller has agreed to hold the car, and not sell it to another buyer, for some specified or reasonable time.

Potential remedies

The toughest issue is what the consequences are if the seller takes the deposit but still sells the car to another buyer. Clearly, it’s a breach of contract, but what damages might be recovered?

That depends upon whether the deposit is given in the context of a contract for the sale of the car. If it is, then the damages would be the difference between what the seller agreed to take and what it costs to buy a similar replacement car, thereby giving the buyer the benefit of their bargain.

If the breach is that the car has been sold to someone else, you can’t force the seller to sell you the car because he doesn’t own it any longer. And you can’t force the innocent purchaser to unwind the deal.

But if the car has not yet been sold, you might be able to force the seller to complete the sale if the car is unique enough. But that means unique to a judge, not unique to a car guy.

No deal, so too bad

In the case of the Duetto, there were insufficient specifics about the price and other terms of the deal for there to be a purchase contract. Not to mention, the way Publisher Martin conditioned the purchase on the Alfa being “as represented,” we know there would never have been an actual sale. Consequently, it would seem the only recovery would be the return of the deposit.

Publisher Martin can chalk this up as a $500 lesson. Or he could file a small-claims court action to recover his deposit. He will likely win, and he will just be out his time.

Another possibility would be to make further investigation into the seller’s multiple personas and see if he sells enough cars to be treated as a dealer. If he is a dealer, then he’s violated all sorts of consumer-protection laws here. Beyond just getting the deposit back, Publisher Martin could recover a statutory penalty and, most importantly, recover his attorney fees from the seller. Now that’s a case that he might be able to get a capable attorney to take. ♦

John Draneas is an attorney in Oregon and has been SCM’s “Legal Files” columnist since 2003. His recently published book The Best of Legal Files can be purchased on our website. John can be contacted at [email protected]. His comments are general in nature and are not intended to substitute for consultation with an attorney.

One Comment

  1. A couple thoughts on this one. When you violate PayPal’s TOS, you are CHEATING them. Have I done it? Everyone has! Just don’t expect to get cheerful customer service from the company you just beat out of a fee. Prevention? Hey, Bring a Trailer. Ask for extra pictures. Look at documents. Seems there are a number of ways to sniff this one out.